Fabricating data in China, it turns out, is not only a favorite government pastime. Publicly traded, if state-owned, phone giant Unicom Group fabricated financials relating to 1.8 billion yuan ($261 billion) in revenue over a five-year period from 2012 to 2016 – or as the company admitted, it engaged in an "unprecedented degree of falsified revenue." This is China we are talking about, where the definition of "unprecedented" is very different from the US.
Lest there be any confusion, Bloomberg further elucidated that Unicom "engaged in organized, cross-departmental faking of financial figures" – according to an internal document leaked to Bloomberg. The disclosure is just another reminder of just how endemic fraud is at both government agencies and various enterprises in China. Recall that back in January, People’s Daily confirmed what everyone had known: the government was officially making up numbers in the rust-belt province of Liaoning, and fabricated fiscal numbers after the local economy was crippled by the commodity crunch.
In a statement provided to Bloomberg, company officials claimed the fraud had a “relatively small impact” on the company and that figures had already been corrected in its financial statements. To assure investors, the company claims it has now strengthened oversight, having sacked 70 managers who were allegedly responsible for the fraud. It has also strengthened its monitoring efforts. Of course, with non-existant government oversight, corrupt auditors and "pay me as you go along" internal supervision, the numbers will remain as cooked as ever.
What was interesting was the timing of the leak: the report appeared as the Unicom Group is preparing to raise billions in capital from private investors after the firm was one of six state-owned enterprises selected for a pilot program in mixed ownership. Some have speculated that the leaker is either a disgruntled insider, or a case of industrial sabbotage with the document being passed to Bloomberg by a bidder hoping to buy at a more attractive price.
Hong-Kong based analyst Steven Liu of China Securities International also downplayed the significance of the disclosure, arguing the “irregularities” wouldn’t materially impact the company's bottom line. What was to be expected: after all Liu has a buy rating on the stock.
Here are a few more selections from the leaked document, courtesy of Bloomberg:

About 17% of the total falsified revenue came from Shaanxi’s Tongchuan and Yulin cities, while the Hanzhong branch falsified more than a third of its revenue
Penalties ranged from dismissals to administrative warnings, suspended party membership and salary deductions
Managers were punished according to the Communist Party disciplinary guidelines
The nature and repercussions of the fraud are "unprecedented" in Unicom’s history, according to the document

The news rocked shares of Unicom on Thursday; they closed at HK$10.24 after falling 3.2%, the largest drop in a month. Shares of China United Network Communications, its Shanghai-listed arm, have been suspended since late March, pending further disclosure of its mixed-ownership plan. Who knows what fraud is hiding there.

Despite authorities’ claims to the contrary, the fraud is, of course, representative of how managers at large Chinese corporates react when the numbers don't match their expectations. The Hong-Kong listed arm of the company has seen revenue fall during each of the last three years, together with profits for the last two as competition in the space has intensified. The leak offers a glimpse into how Chinese firms react when business starts to slow: managers hoping to preserve their reputations, not to mention their jobs, and keep the government-funded money spigot flowing have every incentive to falsify revenues and profit figures.
Incidentally, US companies do the same thing, only there it's called non-GAAP EPS (and revenue) and adjusted effective tax rate and remains perfectly legal.